Nature And Biodiversity: Sustainability’s Next Frontier Is Here And Now

Nature And Biodiversity: Sustainability’s Next Frontier Is Here And Now

With $44 trillion in economic value being at risk due to business reliance on nature – over half the world’s total GDP – the strong push for net zero is now being increasingly complemented by an emerging focus on 'nature-positive' as an essential business imperative. Firms are confronting their responsibility to curb the worsening effects of nature degradation and the associated risks to business, while also seizing the considerable business benefits that can be gained in the process.

Momentum behind the nature-positive movement comes from:

• Regulatory drivers.
  Legislation such as the Corporate Sustainability Reporting Directive (CSRD) – through ESRS E4: Biodiversity and Ecosystems – EU Deforestation Regulation (EUDR), the Sustainable Finance Disclosure Regulation (SFDR) in the EU and the Biodiversity Net Gain (BNG) regulation in the UK (see Verdantix UK’s Early Biodiversity Rules Set Precedent Other Nations Will Likely Follow) are requiring firms to consider and address their impact on nature.
  
  
• Voluntary frameworks.
  The Taskforce for Nature-related Financial Disclosures (TNFD) – which is expected to have a similar trajectory to the TCFD – and Science Based Targets for Nature (SBTN) are also signalling the importance of incorporating nature into sustainability agendas for the global community (see Verdantix Strategic Focus: The Connection Between The TCFD, TNFD And ESG Risk). At the 2022 UN Biodiversity COP15 in December 2022, nearly 200 governments committed to the Kunming-Montreal Global Biodiversity Framework (GBF) to halt and reverse nature loss; this agreement is widely being hailed as the Paris Agreement for nature.
  
  
• Right-based norms.
  Biodiversity protections are increasingly being enacted as right-based norms, as evidenced by right-based biodiversity (RBB) lawsuits being filed across the world. Additionally, a growing number of countries – such as Panama, New Zealand and Ecuador – now have some form of national law recognizing the rights of nature or legal personhood for ecosystems.
  
  
• Investors, customers and employees.
  These stakeholders are also urging firms to consider and address their effect on nature (see Verdantix Strategic Focus: Navigating Nature-Related Risks). Reputational risks associated with nature-inconsiderate business activities are slowly but steadily increasing: 46% of the world’s largest firms have at least one asset located in a key biodiversity area (KBA) that could be exposed to future reputational and regulatory risks.
  
  
• Interlinkages between nature, climate and carbon.
  The interconnectedness of these factors provides the business case for addressing nature concerns while firms are already in the midst of overhauling their businesses strategies and practices in a climate- and carbon-dominated ESG landscape. By integrating these efforts, businesses can achieve multiple sustainability goals with unified strategies, reducing resource redundancies and administrative and reporting burdens while enhancing resilience and innovation. For example, even the goal to collect TNFD biodiversity and nature-loss data will complement existing climate and ESG disclosures, and enhance overall risk management.
  
  

Despite the nature-positive conversation becoming louder, it remains but a whisper. Most of the world’s top 500 organizations have a climate target – but only 5% have one for biodiversity, despite biodiversity loss being the third-largest global risk over the next ten years. Firms face significant obstacles on their way to becoming ‘nature-positive’, including the complexity of measuring impact and predicting outcomes in interconnected ecosystems; a lack of in-house expertise and gaps in scientific knowledge that complicate strategy design; and the difficulty of integrating nature-based initiatives into existing business models and supply chains.

If you are interested in ways organizations can incorporate nature into their ESG and sustainability strategies, please read Verdantix Takeda Forays Into Nature Impact And Risk Assessment With Arcadis and Verdantix ENGIE Works With ERM To Strengthen Its Nature Analysis Using The LEAP Approach.